Magnus Bocker, the acquisitive chief of the Singapore Exchange, undoubtedly has his detractors. But, as we noted on Thursday, it’s hard not to feel a twinge of sympathy after seeing the cavalier way that Australia – and particularly its Treasurer, Wayne Swan – sank his ambitious bid for Australia’s ASX.
However, confirmation on Friday that the SGX/ASX merger is officially dead has already opened up a range of possibilities amid the current wave of exchange merger frenzy. As one London-based broker told us on Friday, eyeing the LSE’s planned merger with Canada’s TMX :
The question is what happens next in the world of exchange consolidation ? A Far Eastern partner for the London-Canadian tie up would in my opinion make a lot of sense.
Being the third party and a late arrival in an agreed two-way merger might not be Bocker’s idea of building his empire in the exchange world. But as a man who now faces his “Marius Kloppers” moment (referring to the widespread criticism of BHP-Billiton’s chief executive after his audacious bid for Canada’s PotashCorp crashed down) Bocker may not have a whole lot of options.
He is, as many commentators noted on Friday, a man racing against time: either find a new target or “risk the SGX itself becoming prey”, as DealTalk put it.
The TMX/LSE deal, agreed in February, awaits approval from Canada’s federal and Ontario governments – and also from Ontario’s securities commission. Already, though, given last week’s decision by Ontario’s legislative committee to delay its report on the TMX/LSE merger (scheduled for April 7), it seems chiefs of the two bourses could be heading for their own “Kloppers moment”.
Unlike Kloppers, however, who knew he was up against a tough foreign investment review regime, Bocker had every reason for optimism on the ASX bid. It was not even six months ago that he and Robert Elstone, his ASX counterpart, confidently predicted that regulators would wave through their tie-up.
Given Swan’s now vociferous opposition to the deal, we can only conclude that someone back then was sending misleading signals, and it’s not hard to guess who.
In an outburst of patriotic fervour, Swan even took the unusual step on Tuesday of pre-empting any announcement from Australia’s Foreign Investment Review Board, indicating he was “disposed” to block the deal. Adding insult to injury, on Friday he said it was a “no brainer” that the deal was against Australia’s national interest. The FT reports:
Canberra formally rejected Singapore Exchange’s A$8.4bn ($8.8bn) bid for its Australian rival, ruling that the takeover could undermine Australia’s position as a financial centre as well as jeopardise the stability of the country’s financial system.
In a forthright repudiation of the deal’s merits, Wayne Swan, the country’s treasurer, on Friday told reporters it was a “no brainer” that SGX’s bid was not in Australia’s national interest, and highlighted the “critically important” clearing and settlement functions operated by the Australian Securities Exchange.
He also revealed for the first time that the Reserve Bank of Australia and the Australian Securities and Investments Commission had opposed the takeover.
Mr Swan came in for criticism after signalling on Tuesday that the takeover was likely to be blocked because of national interest concerns.
When questioned about political interference in the FIRB process, Swan, as the FT”s Peter Smith later wrote, was “resolute”.
“Absolutely nothing could be further from the truth,” he said. “The FIRB board is independent. They do their work. They take their decisions independently… They have made a recommendation to me. It’s a recommendation which they spent a lot of time on …”
Sure, Wayne. But the overwhelming sense from most people involved in the deal, notes Smith, “is that the SGX had fallen victim to politics”.
For Bocker, the aftertaste might be particularly bitter given the endorsement this week by Australia’s FIRB of the $6.6bn bid by China’s Minmetals for Canadian-Australian miner Equinox Minerals. Although the $7 a share bid was firmly rejected by Equinox on Thursday as “opportunistic”, investors clearly expect Minmetals – or possibly another suitor – to return with a higher offer; possibly, as BeyondBrics points out, at $8 a share, .
As for Bockers, there’s little more to say right now except, this is a space to watch…
Related links:
John Durie: Control an easy fix in ASX drama - The Australian
Exchanges Consolidation - FT TradingRoom
Is Australia closed for business? – Heard on the Street
Bocker’s dream turns into a nightmare – FT Alphaville